Kenya’s Digital Lender Clean-up Yields More Licences, Not Fewer Complaints

A Kenyan borrower took a KES 177.72 K (USD 1.375 K) loan from African Capital Limited, a licensed digital lender. When additional charges were applied, the balance climbed to KES 500 K (USD 3.869 K). The Competition Authority of Kenya had to intervene to get the disputed charges waived.

In another case, a borrower said Mwananchi Credit repossessed his vehicle two months after issuing a loan, despite an unresolved contractual dispute.

These are not complaints about rogue, unregulated lenders. These are cases involving licensed digital credit providers operating under the supervision of the Central Bank of Kenya.

Kenya amended its laws in 2022 to bring digital lenders under formal supervision, following years of public outrage over excessive borrowing costs, misuse of personal data and aggressive debt collection. The central bank has since licensed 252 digital credit providers, with more than 500 applications still pending. Licensed providers have issued 8.3 million loans worth KES 150 B (USD 1.16 B).

The complaints have not stopped. Rather, they have surged. The Competition Authority of Kenya recorded 355 complaints against digital lenders in the year ending June 2025, up from 67 the previous year. That made digital lenders the largest source of consumer complaints in financial services, accounting for nearly two-thirds of all grievances in the sector.

The authority attributed the trend to misleading representations, undisclosed charges and unilateral changes to loan terms. “This sector has, over the years, continued to record a high number of cases,” the watchdog said.

The financial services sector accounted for 564 of the 915 consumer complaints received during the year, or 61.6% of all cases. Microfinance institutions accounted for 113 complaints, while Saccos and commercial banks recorded 68 and 28, respectively.

The data suggests a disconnect between regulatory intent and market reality. Kenya’s digital lending market is now one of Africa’s largest testing grounds for app-based credit, with millions of borrowers accessing loans through apps and USSD codes.

The speed and convenience are real, but so is the information asymmetry built into the business model. Apps are polished and fast. The actual terms of the loan — the true interest rate, the penalties, the fees — are often disclosed late or not at all.

The central bank has acknowledged the gap. It barred unregulated digital lenders from forwarding the names of loan defaulters to credit reference bureaus and stopped the blacklisting of borrowers owing less than KES 1 K. The withdrawal of approvals for unregulated credit-only lenders, the bank said, was “in response to numerous public complaints over misuse of the credit information system”.

Ir appears at the moment that the licensing regime is expanding oversight but has yet to eliminate disputes between lenders and borrowers. The question is whether more licences will translate into better conduct, or whether the industry will continue to grow faster than the rules meant to govern it.